How I started and sold my business in 12 months: Gadget Exchange founder Eddie Wilson
Wednesday, January 14, 2015/
Pre-loved mobile merchant Monster Mobile snapped up Gadget Exchange this week for an undisclosed price in a coup for the startup’s co-founders Eddie Wilson and Owen McCrink.
Wilson and McCrink only started Gadget Exchange in late 2013 and managed to make a profit in the first three months before negotiating the sale to rival Oz Mobile (trading as Monster Mobile) this week.
SmartCompany understands Gadget Exchange turned over in excess of $500,000 in its first year of operation.
Venture capitalist-turned-entrepreneur Wilson told SmartCompany the sale marked a successful 12 months after he left the corporate world “to get my hands dirty” and live the life of an entrepreneur.
“I loved the investment industry, but I just couldn’t shake the notion of sitting in judgement of entrepreneurs with really just a business plan and a spreadsheet,” he says.
“The real credibility of investment comes from direct experience.”
Identifying a market need
McCrink’s previous experience in the sector, founding the business ReGadget, enabled the pair to spot an immediate gap in the market.
“Obviously he knew the industry and business model backwards,” Wilson says.
“The major challenges were essentially around increased competition and vastly different margin opportunities that come as a matter of course through a crowded marketplace and increased consumer awareness.”
Wilson knew the industry was tightening in the consumer space with diminished margin opportunities.
“Hence we focused on high end B2B trading and re-sale back into local markets,” Wilson says.
This allowed Gadget Exchange to achieve greater margins and was also the catalyst for spending more time on the devices and exploring other software platforms.
“We also spent time and money on our own business software, primarily for trade-in programs and pricing,” Wilson says.
“This enabled us to design tailored programs for online and pure-play retailers.”
Wilson says the key factors driving Gadget Exchange’s success and speedy sale were the right mix of people and skills and “a belief in what we were setting out to achieve”.
Sticking to the mantra ‘cash is king’ also proved invaluable.
“By trading our way through the initial establishment costs, then placing an emphasis on consistent sales, we never dug ourselves a financial hole,” Wilson says.
The pair also used available research and development grants wisely and made sure to draw on their personal and professional networks for support.
“We have had so much support from various friends and colleagues along our journey,” Wilson says.
“This doesn’t happen by accident. We invested a lot of time and effort into helping their endeavours and pushing for mutually beneficial outcomes.”
For example, Gadget Exchange shared an office with digital, marketing and PR business Havas Worldwide.
“We have grown to really like the staff and admire their office culture. We also have their relevant expertise right at our disposal,” Wilson says.
“In return, we have been channelling opportunities to Havas and have opened up an exciting sales pipeline through our contacts.
In its short existence Gadget Exchange also faced the typical challenges thrown at many SMEs.
“When you are a small business and rely on service providers, partners and counterparties, invariably you have to be patient in awaiting outcomes,” Wilson says.
“It was my single biggest source of frustration. Once things are prolonged, there is a real danger that they are not adequately executed; things get missed. “
But Wilson says the biggest challenge was the stress involved in capitalising the business with his own cash.
“This certainly sharpens your focus,” he says.
“The great lesson I took from this was to always treat investment capital with respect. Delivering results for the shareholders is ultimately the name of the game.”
The next venture
It’s onwards and upwards for Wilson and McCrink who have launched a new software venture, Advance Mobi.
Developing more sophisticated software for Gadget Exchange led to the pair spotting the opportunity to sell and license the platforms.
“This led us to explore another software venture, which is essentially predicated on providing digital marketing solutions to the massive secondhand mobile market,” Wilson says.
“We have spent the past six months refining this business plan and lining up all our key service providers to enable us to complete a sophisticated minimum viable product,” he says.
“We will undertake a capital raise in support of this build.”